OWA: Nigeria needs to support local businesses

Uchenna Izundu
International Editor

ABUJA, Feb. 1 -- Nigeria should financially support indigenous companies in the oil industry to ensure that Nigerians can participate in its development, a senior academic has suggested at the Offshore West Africa Conference.

Offiong Akpanika, lecturer in the department of chemical and petroleum engineering at Uyo University, said too many Nigerian companies were failing because they refused to unite and draw attention from multinationals and government as viable enterprises. "We want to have sustainable industrial growth and generate national wealth."

By setting local content targets, the government has encouraged the growth of Nigerian service suppliers to the industry and the start-up of Nigerian oil operators through the development of marginal fields. But increasing the delivery of local content is challenging, with companies facing stringent requirements to secure funding from banks and high interest rates to pay back loans.

Another challenge is developing a sophisticated legal framework for local content and ensuring that there are sufficient jobs for trained personnel. Delayed projects are leaving too many companies without work or guarantees that they will be paid for that standby period. "We need to develop a strong industrial and manufacturing industry," Akpanika stressed.

Competitive costs with other international centers are fundamental if companies are to build a sustainable engineering work force in Nigeria, said Femi Aisida, chief office manager for Shell Nigeria Exploration & Production Co. Following a Nigerian directive for front-end engineering design (FEED) work to be performed in Nigeria from 2006, Shell developed a Nigerian team to carry out the FEED for the deepwater Bonga NorthWest field, a subsea tieback to an existing manifold.

"An economic challenge is the cost of establishing the expertise in addition to executing the FEED," he added. Mistakes on technical work are extremely expensive to rectify, so Shell trained the staff by bringing in experienced engineers from overseas to monitor the work. "Coordinating expertise from diverse locations was difficult," Aisida said. The company is keen to retain the Nigerian team and develop its expertise beyond FEED work to support its other business units, provided that the quality of work is sound and performed within a competitive timeframe.

Next month Bonga will be shut in for routine maintenance for 10 days with a loss of 225,000 b/d to the market. Attacks on oil and gas pipelines in the Delta have reduced supplies by an average of 850,000 b/d, leading to a fall in investor confidence and a loss of income for the country.

Contact Uchenna Izundu at uchennai@pennwell.com.

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